- How will these changes impact liquidity, ideally calculating two scenarios, full sell-of of all options vs full ignorance of the airdrop?
- Could you provide a rough estimate of the premium value at time of the airdrop to simplify taxation?
- Will it be possible for receivers of the airdrop to look up this info next year when they file?
- Can you share the eligible addresses?
- What’s the timeline for the marketplace release?
There might be a risk of causing additional tax burden on dao members if the option is illiquid at the time of the airdrop, it’s more safe when people can just immediately sell and hence book the premium as income from airdrop on the same day. I would prefer for the airdrop to be held under time-lock until that’s possible.
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- Currently there is ~$15.5K of gamma (liquidity) within 2%. After expiration, assuming full ignorance this becomes $5.6K vs full sale $7.8k. These figures are not static though, they increase closer to expiration and closer to strikes
- The premium vs. a conservative estimate of implied volatility is $12K net to the community. Point of clarification the “airdrop” will be conducted by a claim rather than a no effort push. That way it’s an opt-in program.
- The data will be onchain and we have the scripts to pull the set of addresses that claim. Taxation-wise, generally option grants like ESOPs do not have any tax liability upon receipt so long as they are OTM. Tax liability hits only upon exercise, but this can vary by jurisdiction. This actually is major benefit of options vs vesting or standard token airdrops.
- The Governance verifier does this onchain and as such there isn’t a plan to publish or host that list as we would with the merkle verifier where the list is created offchain. Could be done separately though.
- The first version as an atomic swap tool, I would conservatively say 2 weeks.
Tax burden definitely is worth avoiding and since it is opt-in there will be no forced reconciliation for eligible DAO members.
There will be no exercise for May (MNGO Buyback 6) so we will roll all of the 0.018 strike buyback.
The goal for the next issuance is to put the full functionality on display.
- Proposal to mint Staking Options to Mango DAOs treasury
- Use that mint in a Proof-of-Governance Airdrop Proposal whereby recent active Mango DAO voters earn these options rather than a grant to the Dual DAO.
- Rewarded Mango DAO members may exercise or liquidate the options directly on Dual Finance
- Any liquidations will pay users USDC immediately from the Risk Manager
- Risk Manager dynamically manages its option position and continues to provide natural liquidity to OpenBook MNGO/USDC
Note: Proposals to exercise the DUAL Options rewarded to the DAO for the security review & listing DUAL on Mango-v4 UI are live too.
Looking ahead to the roll of the June 1st Staking Option, there will be a partial exercise of ~6M MNGO. Life to date the program has purchase 6,802,632 MNGO for ~135K.
Firmly believe the program continues to achieve several goals for the DAO
- Very cheap indirect market making relationship, (89% of OpenBook volume traded)
- Market stability/ floor near the strikes over a volatile period (lower volatility & more invest-able token)
- Buyback MNGO at a discount where otherwise difficult for a DAO operationally
- New reward tool for DAO members/traders/liquidity providers to the platform (airdropped half of the July puts to accounts that traded OpenBook MNGO/USDC, looking to expand the distribution)
- Sufficient liquidity for MNGO B/L & liquidation
After 6 months we are approaching the original target of a 250K USDC buyback, but based on the above metrics/benefits I’d suggest it’s in the DAOs best interest to continue the program.
Would be good to get people’s thoughts on target size for the next 6 months and any preferences around strikes. We reduced the strikes starting in April. Bearing in my the marketing push around Mango v4, it may well timed now to increase the sizes and strike prices.
A means of a jumping off target price & sizes, I’d propose $250K up to a 0.02 strike and $600K down to 0.015. Since MNGO is about in the middle of that range target and the July puts are active for $125K, use for August $300K for 0.019.